Correlation Between Assertio Therapeutics and Alkermes Plc

Can any of the company-specific risk be diversified away by investing in both Assertio Therapeutics and Alkermes Plc at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Assertio Therapeutics and Alkermes Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Assertio Therapeutics and Alkermes Plc, you can compare the effects of market volatilities on Assertio Therapeutics and Alkermes Plc and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Assertio Therapeutics with a short position of Alkermes Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Assertio Therapeutics and Alkermes Plc.

Diversification Opportunities for Assertio Therapeutics and Alkermes Plc

-0.32

Correlation Coefficient

Assertio Therapeutics  Alkermes Plc

Very good diversification

The 3 months correlation between Assertio and Alkermes is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Assertio Therapeutics and Alkermes Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alkermes Plc and Assertio Therapeutics is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Assertio Therapeutics are associated (or correlated) with Alkermes Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alkermes Plc has no effect on the direction of Assertio Therapeutics i.e., Assertio Therapeutics and Alkermes Plc go up and down completely randomly.

Pair Corralation between Assertio Therapeutics and Alkermes Plc

Given the investment horizon of 90 days Assertio Therapeutics is expected to under-perform the Alkermes Plc. In addition to that, Assertio Therapeutics is 1.86 times more volatile than Alkermes Plc. It trades about -0.04 of its total potential returns per unit of risk. Alkermes Plc is currently generating about 0.04 per unit of volatility. If you would invest  2,826  in Alkermes Plc on September 4, 2024 and sell it today you would earn a total of  111.00  from holding Alkermes Plc or generate 3.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Assertio Therapeutics  vs.  Alkermes Plc

Assertio Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Assertio Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Alkermes Plc

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Alkermes Plc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable forward-looking signals, Alkermes Plc is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Assertio Therapeutics and Alkermes Plc

The main advantage of trading using opposite Assertio Therapeutics and Alkermes Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Assertio Therapeutics position performs unexpectedly, Alkermes Plc can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Alkermes Plc will offset losses from the drop in Alkermes Plc's long position.

The idea behind Assertio Therapeutics and Alkermes Plc pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Fundamental Analysis module to view fundamental data based on most recent published financial statements.